My question is, why the HELL did you lend them the money in the first place? We know how Wall street is and we know how the banks are. Did he think by lending the banks all this money, it would somehow trickle down to the people who actually need it? How profoundly stupid.

These CEOs are now making record bonuses, WTF. These people are some of the worst in America and we don't seem to want to regulate them. Ben Bernanke is terrible. What Obama did is like giving a criminal with numerous weapons, thousands of rounds of ammo. It makes no sense.

Quoting FuturePilot16 (Thread starter):These CEOs are now making record bonuses, WTF. These people are some of the worst in America and we don't seem to want to regulate them. Ben Bernanke is terrible. What Obama did is like giving a criminal with numerous weapons, thousands of rounds of ammo. It makes no sense.

You Blame Obama??

Go back and look where the original bailouts came from in 2008, when Obama was just a Senator.

To do nothing would be political suicide, and secondly now that they are making money its time for the govt to step in and take back all the money it needs. I'm still waiting for serious regulatory reform in the financial markets. If the banks can't be trusted then the govt has the right to step in.

Of course some will scream that its socialism

short summary of every jewish holiday: they tried to kill us ,we won , lets eat !

And what is wrong with that? If a company is making money, by all means reward folks.

Anyhow, what do you think happens with bonus money? When I get a bonus especially large amounts I either 1) spend it on large items, or 2) invest it including on property.
So money ends up one way or the other back in the economy.

Business should never be shamed into paying what they feel is appropriate. We dont seem to have problems with athletes or celebrities earning huge sums, so why should corporate be demonized.

Quoting Mt99 (Reply 1):Why the HELL did banks lend the money to home buyers in the first place?

That is the good question.

But you know its comical the government today is jumping up and down encouraging banks to lend again, which is exactly what got us in the mess.

So what the government want? Banks to be more cautious with lending practices to avoid free flow of money and mistakes as before, or for them to carefully review and weigh every lending decision which obviously would find many businesses and people too risky to lend to.
Mr. Obama you cant have both.

Quoting Mt99 (Reply 1):Why the HELL did banks lend the money to home buyers in the first place?

Lots of reasons, but boy did the politicians love it when every man, woman, and child could get a loan to buy a house, regardless of their income and ability to pay it back.

Quoting LAXintl (Reply 4):But you know its comical the government today is jumping up and down encouraging banks to lend again, which is exactly what got us in the mess.

As soon as they start lending only to people who can afford loans, they'll again be accused of being anti-poor, which invevitably affects minorities more, and therefore racist, and the cycle will repeat. Never mind Fannie/Freddie...

Quoting Mt99 (Reply 1):Why the HELL did banks lend the money to home buyers in the first place?
1. The government required them to lower their standards, all in the name of "affordable housing", through tools such as the CRA.

2. To ease some of the risk, the government required Fannie Mae and Freddie Mac to buy a lot of these risky mortgages, creating an artificially inflated secondary market for these assets.

Without such requirements and the support of the FM Twins, no bank is going to loan people 100% of the value of a house with dicey income and no 'skin in the game'. The bubble would not have happened, and neither would the collapse of last year.

Quoting FuturePilot16 (Thread starter):These CEOs are now making record bonuses, WTF. These people are some of the worst in America and we don't seem to want to regulate them.
I'm all for intelligent regulation. The banks in the US ARE regulated, but on stupid things such as CRA. If you want a good example, look at the Swiss Banking system. One thing you can say about Switzerland is that they know how to manage a solid banking system (at least internally - they got in trouble outside of Switzerland). The Federal Banking Commission which regulates the banks is powerful, but the regulations are short and concise, making compliance more of a question of execution than just paperwork, as it is mostly here.

My problem with this new proposal is that it creates a huge new tax on banks, even those that have already repaid all of their TARP money, including interest. That's hardly fair.

I think that even though some people are saying that doing nothing would have been horrible, it's still horrible event though the gov't took billions of taxpayers money and essentially gave it to the banks, they did nothing with it other than pocket it do their fat cat CEO's can buy a new yachts and new planes.

Quoting Dreadnought (Reply 6):My problem with this new proposal is that it creates a huge new tax on banks, even those that have already repaid all of their TARP money, including interest. That's hardly fair.

I'm fine with those financial institutions that have repaid what they had to the gov't, they have no obligation beyond that.

Quoting Mt99 (Reply 1):
Why the HELL did banks lend the money to home buyers in the first place?

Because our gov't over the last 8 years chose not to regulate them and allowed it to get out of hand, AND we continue not to want to regulate these banks.

The gov't, chairman of the fed, Geithner, anyone who had to with the massive amount of tarp money given out to these banks.

Quoting Dreadnought (Reply 6):One thing you can say about Switzerland is that they know how to manage a solid banking system

Amazing that the U.S. with all of our Pulitzer prize winning economic advisers can't seem to do a simple thing as to regulate banks. It's a lot more complicated than it sounds, but it can be done, and should be done now.

Quoting LAXintl (Reply 4):And what is wrong with that? If a company is making money, by all means reward folks.

No. I'm not comfortable with these guys getting pay raises with the money coming from the taxes of hundreds of millions of dollars. They're already making an Insane amount of money per year. Are you telling me that some CEO making 9 million dollars per really needs a bonus of 3 million dollars? It makes it ten times worse that their companies are in such horrible conditions.

Finally... they need to get rid of Geithner. The same guy that ran the fed in New York for 6 or 7 years, running the financial system into the ground, then they appoint him Secretary of Treasury so he can take the hundreds of millions of dollars of taxpayer money and give it back to the same banks that he help run into the ground.

At the height of the crisis both Administrations understood that we would have a massive free fall if the major banks were allowed to fail.

That resulted in bailouts for the good of the country - not the good of the banks.

And, unfortunately, the banks maintained a self-centered attitude ever since they were bailed out. Now we see how much they love themselves - putting cash over country - with bonuses that are a huge percentage of the annual profits.

I'm not surprised if there is anger in the country each year the money game starts. At it appears that attitudes are at a point where the public and politicians (not on the bankers teat) are ready for some changes. A tax on non-lending income? Fine. Taxes on bonuses? That looks possible, especially when it adds in business sectors that provide bonuses in stock to minimize taxes.

I can also see the Fed changing the fees charged - especially when it comes to banks that do not focus on lending.

And maybe go and un-repeal some laws in the banking industry.

Quoting LAXintl (Reply 4):Business should never be shamed into paying what they feel is appropriate.

Quoting Dreadnought (Reply 6):My problem with this new proposal is that it creates a huge new tax on banks, even those that have already repaid all of their TARP money, including interest. That's hardly fair.

I won't cry very much for those banks that screwed up so much - especially if they are focusing on investing as opposed to lending. Let's break these oversized companies up into manageable pieces, regulate them at a more effective level and support only those who are in the country's interests.

Quoting Mt99 (Reply 1):Why the HELL did banks lend the money to home buyers in the first place?

A piece of legislation got passed called Community Reinvestment Act during the Carter administration saying that banks couldn't discriminate in lending to people based on whether they lived in a high or low income area. The banks were correct in concluding that people who live in low/middle income areas tend to have worse performance in terms of re-payment. In 1992, Bill Clinton made Fannie Mae and Freddie Mac make a percentage of their loans to support "affordable housing." Furthermore, Janet Reno threatened banks that if they didn't participate in CRA they would be subject to huge fines and prosecution. If it was up to the banks, most of them would've never made the loans had the government not put a gun to their heads.

In fact, for a time during the G.W. Bush administration a few people were screaming that if these laws weren't changed drastically the market would tank with bad loans. However, good ol' Barney Frank wasn't about to let facts stand in the way of Democrat policies, and angrily protested that this was racist, anti-poor, etc.

This is the dirty little secret that never gets reported in the mainstream media.

Quoting FuturePilot16 (Thread starter):My question is, why the HELL did you lend them the money in the first place? We know how Wall street is and we know how the banks are. Did he think by lending the banks all this money, it would somehow trickle down to the people who actually need it? How profoundly stupid.

I agree. They never should've received a dime. However, trickle down to the people who need it? What did you expect? Your bank teller handing out a 5-spot instead of a lollipop? A bank needs to do things like pay its employees and run its operations.

Quoting FuturePilot16 (Thread starter):These CEOs are now making record bonuses, WTF. These people are some of the worst in America and we don't seem to want to regulate them. Ben Bernanke is terrible. What Obama did is like giving a criminal with numerous weapons, thousands of rounds of ammo. It makes no sense.

These people are the worst people in America? Why? Nothing is worse than trying to make a profit and continue the employment of 80,000 people in your company, right. Regulate them how? Tell them how much they can earn? That is a textbook definition of socialism.

Quoting FuturePilot16 (Reply 8):No. I'm not comfortable with these guys getting pay raises with the money coming from the taxes of hundreds of millions of dollars. They're already making an Insane amount of money per year. Are you telling me that some CEO making 9 million dollars per really needs a bonus of 3 million dollars? It makes it ten times worse that their companies are in such horrible conditions.

So you'd pay the CEO $1 million a year, right? Have a good time finding and retaining a well-qualified CEO in the banking industry for that. FuturePilot16, why stop at upper management at banks and brokerage houses? Lets stop athletes, actors, and musicians from earning $9 million a year, with $3 million bonuses. I'm sure champions of social justice like Spicol... Sean Penn and Babs Streisand would be cool with that.

The real trouble with this bill is that the banks are going to be taxed, and with all corporate taxes, who is really paying for it? You, the consumer are.

Quoting JCS17 (Reply 10):This is the dirty little secret that never gets reported in the mainstream media.

That a pretty good description of that side of the coin. The OTHER side of the coin was that the financial sector developed game to play that ;allowed them to make money off of a cat or dead person buying a house. Lots of falsified documents, lots of games and a plump slice of profit off of each sale - no matter how bad the loan. Even Barney Frank couldn't have guess the degree of profitability the sector would make off of the games they played.

If we get back to reality, there is essentially nothing wrong with developing programs for lower income people. Cut of the games that have been played, limit the size of the homes to avoid McMansions, fund special needs for disabled, and don't make the path to a home too easy - require some demonstration of work habits, taking personal financial management classes, etc.
And keep a hard eye on those financing the programs. Set standards and identify in advance the prisons where those playing games will go. The failure to jail a lot of the game playing, high money making SOBs that inflated this mess is an unfortunate indicator that it can happen again.

How about regulating them so they don't lend out hundreds of millions of dollars in loans to people living below the poverty line, people they know for a FACT cannot repay the loans. WOW, how socialist of our gov't if they ever did that. How dare they regulate the banks and stop them from helping to collapse the U.S. economy , but of course we surely can't That's socialism.

Quoting JCS17 (Reply 10):Have a good time finding and retaining a well-qualified CEO in the

Qualified CEO? So it doesn't disturb you to know that the gov't took your money and gave it to multi millionaires so they can pocket it and make themselves richer?

Quoting JCS17 (Reply 10):athletes, actors, and musicians from earning $9 million a year, with $3 million bonuses.

WHAT? What are you talking about? Actors and Athletes are entertainers who we pay to see for our own entertainment. Where do you get that from? A CEO is not an entertainer, and an Athlete is certainly not upper management, although they do make just as much. However, those Athletes and Actors of which you speak don't take taxpayer money, which they should use to better their business, and put in their greedy pockets.

Quoting Ken777 (Reply 9):et's break these oversized companies up into manageable pieces, regulate them at a more effective level and support only those who are in the country's interests.

NO WAY, we can't do that. According to JCS17, that is a textbook definition of socialism.

Quoting LAXintl (Reply 4):And what is wrong with that? If a company is making money, by all means reward folks.

As a taxpayer whose money went to bail them out when their greed forced them to go begging at government's feet, I'm of the opinion that they shouldn't be getting any bonuses until they pay us all back first. One less summer home isn't going to be the end of them.

Oh and for those of you who are going to argue that companies need to reward the higher ups because they're the best and the brightest of society, jsut remember that the best and the brightest wouldn't have gotten us into the mess we are in.

Quoting LAXintl (Reply 4):We dont seem to have problems with athletes or celebrities earning huge sums, so why should corporate be demonized.

IMHO, they are similarly overpaid for the work that they do.

Quoting JCS17 (Reply 10):Tell them how much they can earn? That is a textbook definition of socialism.

Quoting FuturePilot16 (Reply 13):How about regulating them so they don't lend out hundreds of millions of dollars in loans to people living below the poverty line, people they know for a FACT cannot repay the loans. WOW, how socialist of our gov't if they ever did that. How dare they regulate the banks and stop them from helping to collapse the U.S. economy , but of course we surely can't That's socialism.

First of all, no one living below the poverty line was getting a loan for a house, don't try to embellish the situation.

Your paternalism and elitism is stunning. What about the responsibility of the people who are taking out a loan to make sure they can pay it? Or are lower class people too stupid to understand that? Maybe we should regulate the credit card, mobile phone, and cable TV industries too, so that those less fortunate don't get stuck with a $8,000 Visa bill and a $100 Comcast bill when they make $1,500 a month.

Quoting FuturePilot16 (Reply 13):WHAT? What are you talking about? Actors and Athletes are entertainers who we pay to see for our own entertainment. Where do you get that from? A CEO is not an entertainer, and an Athlete is certainly not upper management, although they do make just as much. However, those Athletes and Actors of which you speak don't take taxpayer money, which they should use to better their business, and put in their greedy pockets.

Quoting FuturePilot16 (Reply 13):NO WAY, we can't do that. According to JCS17, that is a textbook definition of socialism.

The consolidation of companies into "banks" started in the 90s when some restrictions were removed. Let's return those restrictions, step back from the disaster and then watch over all the companies. Exceptional increases in oversight are needed - the last 10 years proved that. The cost of bailing out the banks has gone through the roof, and those enjoying the marketing benefits of FDIC protection need to pay more.

On the tax side, that is at the pleasure of the politicians and I doubt if the average voter will shed too many tears for the bankers.

Quoting CasInterest (Reply 2):o back and look where the original bailouts came from in 2008, when Obama was just a Senator.

So your telling me if Bush told the banks to go screw Obama would have held that stance as soon as he took office? No, Bush went againt his judgement and bailed them out because he if he didn't Obama would have done it and would have spent his whole 4 years blaming Bush worse than he does now.

Quoting NIKV69 (Reply 21):No, Bush went againt his judgement and bailed them out because he if he didn't Obama would have done it and would have spent his whole 4 years blaming Bush worse than he does now.

That's a new one. So now you're telling us that Bush only bailed out the banks because he knew that Obama would have done so anyway and that it was one small way in which to redeem his already tarnished reputation? Nice try.

Quoting Mt99 (Reply 19):Agreed. But are the banks devoid of ANY responsibility? Seriously. Should banks be looking after their investments?

Bingo.

A bank which had to keep the mortgages they sell on their books would automatically look after those investments. They would be careful who they lend to. They would value them at realistic values.

However there is a rational need for a secondary market. Banks need to be able to liquefy these assets if they need to. To liquefy those mortgages, they become securities. Informed buyers (banks, investment companies) would buy such securities with their surplus cash, in return for the interest and principle payments. Prior to purchase, they would grade those securities based on the health of the underlying mortgages - most especially how much the homeowner has invested compared to the bank's investment.

Mortgage Securities, as originally created by the private market, is essentially a Secured Bond, a very safe form of investment. Unsafe mortgages, where there is insufficient security (little or no money down, mainly), could also be sold on the secondary market, but at much less than par value. This provided a market incentive for banks to be responsible with their loans, because if they weren't, their mortgages would be valued at maybe half their face value.

Under such a system, the mortgage industry would be very safe and secure. However, unless you can put at least 20% down, you can forget about getting a loan to buy a house.

What messed it up was Fannie Mae and Freddie Mac. They arrived on the scene and said, "Hey guys, I'll buy all the mortgages you have." The secondary market, which would normally be a failsafe mechanism for banks, and not extensively used, instead became a primary motivator for banks to make loans for the commissions and fees, and then they unload the asset onto FM. This was Government Distortion Number 1.

Government Distortion Number 2 was when the government got onto the "affordable housing" kick, giving quotas to individual banks to loan money in poor neighborhoods, and then ordering the FM Twins to buy them (last I heard, about 50% of mortgages bought by the FM Twins had to be high-risk loans). A mechanism was even provided so that such mortgages would be purchased at close to par value, eliminating the incentive to provide loans only to people who can be reasonably expected to pay.

And the FM Twins would repackage and resell the mortgage securities, with the implicit guarantee of the federal government. Based on that guarantee, they were still at near-par value.

The result is what you said: Banks who sold as many mortgages as they could, regardless of how safe they are, knowing that the FM Twins would buy them at full value, and the banks get the commissions. I heard recently that over 90% of all mortgages in the country are either owned by Fannie/Freddie or have been laundered through them and resold to banks and investment firms. Banks no longer give you a mortgage loan for the promise of repayment of interest and principle over time, but for commissions and fees, and immediately roll them over. The mortgage industry is completely distorted and free-market safety mechanisms short-circuited. AND THE GOVERNMENT DID IT! You might argue that it was done for noble reasons, but government interference were the root cause of all the damage of the last 18 months, because the easy mortgage policies they promoted caused the bubble, which had to burst someday.

I don't blame the banks. They acted properly in regards to the market incentives in place. I blame the government and all the administrations that progressively destroyed all the incentives for banks to lend responsibly.

Quoting JCS17 (Reply 18):
First of all, no one living below the poverty line was getting a loan for a house, don't try to embellish the situation.

It's called exaggeration

Quoting JCS17 (Reply 18):What about the responsibility of the people who are taking out a loan to make sure they can pay it

As I said before, the banks are the bigger picture, you can't always expect human beings to act responsibly, if we all acted responsibly we wouldn't be in this mess.

I don't want to make it seem like i'm blaming the banks alone, because I don't want to. People who inadvertently took loans they couldn't repay are responsible for it as well. But the banks have to have the guts to look someone in the face and say "you cannot afford a house that costs $250,000, therefore we can't loan you this money because you can't pay it back". But the love of money and the amount of interest rates they could pile on these loans made them do this , and they couldn't stop.

At some point, a bank has to pull the plug when they get into a red area. Ya can't overtly blame the people who are asking for loans, because it's up to the banks to weed out who can get a loan they can repay, and who can't.

"The brave don't live forever, but the cautious don't live at all."

25 Aaron747
: The blame lies mostly with previous Democratic Congressional majorities, as has already been enumerated. Utter nonsense. There are accomplished banki

26 MAH4546
: A lot of the banks have already repaid the loans. So I guess you don't have a problem with most of the bonuses then, right? The mess wasn't created b

27 Ken777
: While politicians wanted to open the spread of the home loan ownership I can't remember any law or regulation that required banks (or anyone else in

28 Propilot83
: God I just loved Obama's aggressive speech. Yea hell with the banks, we are going to get our money back period the old days of huge bonuses, corruptio